$495M Sterling Fund Targets Grocery-Anchored Shopping Centers

PALM BEACH, FL—Locally-based Sterling Organization reports it has closed its Sterling Value Add Partners III, LP with total capital commitments of $495 million. The fund exceeded its initial fundraising target of $450 million.

The SVAP III fund intends to primarily target grocery-anchored shopping centers, street retail, power centers and mixed-use properties in major markets across the United States.

Sterling’s first fund in its value-add series, Sterling Value Add Partners (SVAP I), closed with total capital commitments of $138 million. The second fund in the series, Sterling Value Add Partners II (SVAP II), closed with total capital commitments of $311 million. Sterling has a core closed-end fund vehicle, Sterling United Properties I (SUP I) which closed with total capital commitments of $160 million, through which the firm is also currently investing.

Company officials say that commitments for the SWAP III fund were made by a diverse investor base which included domestic endowments, foundations, private and public pension plans, and from funds and large family offices. Sterling states that the SVAP III can be leveraged to provide more than $1.25 billion of buying capacity.

“We would like to thank both our long-time partners and new partners for the faith and trust they have placed in our team with their commitments to SVAP III,” says Brian D. Kosoy, managing principal, president and CEO of Sterling Organization. “We are both humbled by and grateful for their support. As a result of macro challenges facing traditional retailers, we are keenly aware that it is not an easy time politically for institutional investors to invest in brick-and-mortar retail real estate. Our entire team is committed to working tirelessly to take advantage of market dislocation and a rapidly evolving retail landscape on behalf of our partners.”

Sterling, which has regional offices located in Atlanta, Chicago, Los Angeles, New York City and Washington, DC, reported earlier this month its acquisition of a two-property, grocery-anchored portfolio of shopping centers totaling 305,765 square feet in the Minneapolis/St. Paul MSA. The portfolio was purchased from IRC Retail Centers on behalf of Sterling Organization’s SUP I fund for $41.7 million or $136-per-square-foot.

Both properties—Shannon Square Shoppes and Village Ten Shopping Center—are anchored by grocer Cub Foods. National and regional tenants in the portfolio include Life Time Fitness, Anytime Fitness, Dollar Tree, Caribou Coffee, Great Clips, Subway, AAA, Chipotle, T-Mobile, The UPS Store and H&R Block. The portfolio’s current occupancy is 99%.

In late May, Sterling acquired grocery-anchored shopping center Five Forks Crossing in Lilburn, GA. The property was purchased from Kimco Realty on behalf of Sterling’s SUP I fund for $10.5 million or $142-per-square-foot. The 73,910-square-foot property was built in 1991 and is anchored by a 62,000-square-foot Kroger grocery store.

In September 2017 the Sterling Organization completed its second purchase in the New York metro area with the acquisition of grocery-anchored Huntington Square Plaza on Long Island.

The shopping center, which was built in 2002, was purchased on behalf of the Sterling’s SUP I. Sterling purchased the 116,200-square-foot property at 3124-3126 East Jericho Turnpike in East Northport for approximately $43 million.